Romania: Ruling coalition ousts own party's PM in no-confidence vote
June 29, 2017
Political tensions eased after Parliament ratified the appointment of Mihai Tudose as Prime Minister. The previous Romanian government suffered the unusual fate of having been voted out by its own majority on 21 June, just six months after taking power. The vote became necessary when Prime Minister Sorin Grindeanu of the ruling Social Democratic party (PSD) refused to step down despite party instructions to do so and even after his entire cabinet had resigned. The only way out of the political stalemate was for the ruling PSD party to put a motion of no-confidence to a vote.
The political crisis was triggered when the PSD and its junior coalition partner Alliance of Liberals and Democrats (ALDE) withdrew its support for the government on 14 June, citing its dissatisfaction with the slow progress of reforms. Indeed, of the roughly 400 reforms that were meant to be implemented at the six months mark, only around 200 had been fully implemented. However, Grindeanu refused, alleging an attempted power grab by PSD party leader Liviu Dragnea, who cannot become Prime Minister following a conviction for electoral fraud. His decision came as a surprise to most observers given that he had widely been considered a Dragnea loyalist when he was named prime minister in January.
The ruling coalition has had a difficult start to its term in office, after mass protests within its first month threatened to derail it. The bruising first six months could lead Dragnea to tighten the reigns on the government and pursue a more populist policy course with deeper tax cuts and steeper pay rises. Yet the economy is already starting to overheat, fueled by tax cuts and public sector wage increases, which have widened the fiscal deficit to unsustainable levels. Pursuing pro-cyclical policies even more aggressively while the Central Bank maintains an accommodative policy stance could lead to an abrupt and painful adjustment further down the line.
Author: Christopher Mc Innes, Economist